Electricity End-Use Efficiency in Ghana

by Monkgogi Bonolo Otlhogile

In the last three decades, electricity generation in Ghana has more than tripled but the demand continues to outpace the supply. Electricity efficiency is known to reduce the strain on electricity generation as it prevents wastage, reduces the electricity demand per capita, and ultimately results in a more stable and consistent electricity supply. Since 2000, the Ghanaian government has been working on consumer or end-use electricity efficiency through the use of new or improved legislation, the creation of new energy efficiency institutions, and the dissemination of adequate technology for both residential and industrial purposes. Dramani and Tewari (2013) presented a theory of electricity end-use, discussed the types of end-use technologies, and showcased factors that prevent the maximization of these technologies in Ghana. The authors discuss the effectiveness of the policies that the Ghanaian government, alongside nongovernmental organizations and international researchers, implemented to promote the dissemination and use of end-use technologies. They also discuss how the reorganization of energy efficiency organizations has transformed the electricity markets. Dramani and Tewari argue that the technologies and policies the Ghanaian government has been working on are to be applauded but concede that there are market failures that are preventing appropriate adoption by end-users. They argue that the holistic use of institutions will aid in facilitating end-use electricity efficiency in Ghana by addressing current market failures.

Dramani and Tewari state that electricity efficiency focuses on the use of efficient technology and methods that produce more output with less electricity utilization. Electricity efficiency produces positive outcomes such as the reduction of electricity dependence, the mitigation of greenhouse gas emissions, the production of an electricity sustainable economy, and most saliently, it saves money. The authors argue that even though these outcomes seem to be highly beneficial to society, end-users battle with an intertemporal allocation of resources problem, which is focused on profit maximization. That is to say, we assume that end-users will only invest in electricity efficiency if they believe that the benefits of electricity efficiency will outweigh the costs at some point. From 1971–2012, electricity generation in Ghana increased by over 300% from 2944 GWh to 12024 GWh, while the electricity usage has grown by 234%. However, Dramani and Tewari argue that the average percentage consumption growth was 5.6% as compared to 5.4% of generation due to electricity generation crises in 1983, 1997, 2003, 2007, and 2010. This suggests that there was an annual 0.2% supply-demand deficit in Ghana, which the authors believe can be tackled by increasing electricity efficiency. The Ghanaian government began thinking about electricity efficiency after the oil shock of 1975 through the creation of the National Energy Board (NEB) but this effort was not taken seriously because of low electricity prices, general mistrust of government programs, and the use of archaic marketing methods. After the generation crisis in 1997, the Energy Foundation (EF), a public-private sector initiative, was established to take over from the disbanded NEB. The EF is charged with increasing awareness of electricity efficiency and eliminating the apathy end-users have towards electricity efficiency by avoiding excessive bureaucracy, slow paper processes, and public mistrust that the NEB was associated with.

According to Dramani and Tewari, after the creation of the EF, Ghana began to think more critically about residential and industrial electricity efficiency through collaborations with the United States Department of Energy, the Alliance to Save Energy, and the Lawrence Berkeley National Laboratory (LBNL). These collaborations resulted in new laws, electricity efficiency exhibitions, and the National Forum on Electricity Efficiency. In particular, in 1999, the LBNL in conjunction with the EF produced a report that verified the use and effects of electricity efficiency in Ghana and outlined minimum standards for appliances for residential purposes. This study would be used as the basis for the undertaking of a number of electricity efficiency standards in Ghana through the creation of the Collaborative Labelling and Appliance Standards Programme (CLASP) in 2000. Dramani and Tewari argue that the targeted and concerted effort of the Energy Foundation and Energy Commission has resulted in three major energy efficiency wins. After the discovery that 85% of household appliances in Ghana were second-hand, they pursued the nation-wide adoption of the Minimum Electricity Performance Standards (MEPS). MEPS banned the sale of appliances that failed to meet a minimum amount of electricity efficiency and mandated the labeling of the minimum electricity efficiency standards on all appliances. The authors found that a 100% implementation of this program for refrigerators alone could save up to $102 million and up to 20% of the electricity previously used for residential purposes. The Energy Commission and Energy Foundation successfully phased-out the use of incandescent bulbs and replaced them with efficient Compact Fluorescent Lamps (CFLs) through a free rollout in 2007. This swift action resulted in a reduction of electricity consumption by 124 MW in 2008, an annual savings of over $33.6 million, and reduced carbon emissions by 105,000 ton per year. Because Ghanaian industries consume on average, 54% of the electricity, the Energy Foundation has established a power factor minimum industry standard requirement of 0.9, which results in a surcharge if it is not met. This has incentivized firms to improve its power factor as well as implement other electricity saving technologies as outlined by the EF.

Dramani and Tewari argue that the EF was able to move quickly on Ghana’s electricity efficiency issues because of the use of comprehensive residential electricity efficiency policies, which were targeted towards reducing barriers in the electricity market and to protecting the end-users from high prices due to inefficient use. They state that EF successfully used three categories of policies: mandatory policies (laws, comprehensive policies, and appliance and lighting standards), market-based policies (fiscal and financial policies), and social policies (education campaigns and training sessions). However, the authors also argue that Ghana must actively work on factors that hinder effective utilization and deployment of electricity efficiency policies such as a lack of holistic standards, limited demand of energy efficient appliances, and a general lack of end-user awareness. The authors argue that it is the role of electricity institutions to tackle these problems. Ghana’s electricity institutions have four different charges: policymaking, policy regulation, generation, transmission and distribution, and arbitration, which work together to facilitate market transformation in Ghana. The authors commended the Energy Foundation and Energy Commission for their attempts to spearhead market transformation through public electricity festivals, the Refrigerator Exchange Programme and Rebate, the free provisions of CFL bulbs in 2007, and consumer survey studies after major campaigns. However, the authors found that despite the presence of these institutions and strong policies such as MEPS, they were not being fully implemented, regulated, or enforced because not all the institutions were working in tandem. The authors state that all of Ghana’s electricity institutions must actively pursue their mandates to transform Ghana’s market into one that will facilitate rather than hinder nation-wide electricity efficiency. Therefore, they argue that despite the relative success of the electricity efficiency movement in Ghana in the last decade, there is a need for increased institutional support.

Dramani, J.B., Tewari, D.D., 2013. Electricity End-Use Efficiency in Ghana: Experience with Technology, Policies and Institutions. Mediterranean Journal of Social Sciences 4, 669–681.

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